Equipment Tax Break

Advance for Imaging and Radiology Oncology | November 29 – You need a new scanner to generate more income for your practice. Or maybe you’d just like to upgrade to a snazzier model. But you’ve crunched the numbers and held off, preferring instead to hold on to your cash during economically uncertain times.

If that describes you, the federal government is dangling a delicious carrot you may want to crunch on.

To invigorate commerce and accelerate America’s as-yet underwhelming economic recovery, Congress has taken a rather modest, small business-related tax break dating to the 1950s and puffed it up Texas-size into a bona fide tax bonanza. The winners are small business owners eager to expand but timid about striving upward in a down economy.

Class, turn to Section 179 of the U.S. Tax Code.

Though it dates to 1958, Section 179 really came of age in 1981. To help nudge us out of a recession that was mild compared to the current one, the Internal Revenue Service allowed small businesses to deduct a portion of the cost of their capital investments from their gross income. “It was part of the Economic Recovery Tax Act of 1981,” says Shawn O’Brien, CPA, a tax lawyer with the Texas-based law firm Jackson Walker LLP. “Over the years the amount of the deduction has gone up and down.”

Last year, with the Great Recession raging, the amount purchasers could deduct increased dramatically to $250,000. Then, just recently, with jobless rates still depressingly high, the feds doubled down: upping it from $250,000 to $500,000 in a piece of legislation called the Small Business Act of 2010. “It’s scaled up pretty good now,” O’Brien says. “It’s a way Congress believes we can stimulate the economy. It means if you purchase an asset that qualifies for this you can get as much as a half-million-dollar deduction to offset that expense.”


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